Good insurance is worth what you pay for it. Of course, for most of us, it’s still a grudge purchase. We resent having to spend our hard-earned money on it. Until that is, we have some kind of accident and find ourselves under the umbrella of our coverage. That’s when we really come to appreciate it.
In Newfoundland and Labrador, all vehicles on the road are required to be insured for a minimum of $200,000 of third-party liability. Leased and rented vehicles may require limits of $1,000,000 or more. Minimum liability insurance is the least amount of coverage you must have to pay for any damages you cause in an accident. It applies when someone is hurt or their property is damaged in an accident where you are found to be at fault. It included body injury liability coverage, which means other people’s physical damages in an accident.
So, what if you are in an accident in Newfoundland and Labrador, you are injured, and it’s the other person’s fault? Their insurance agency will cover your injuries and damages up to the maximum amount of their coverage. But the unfortunate fact is that $200,000 is not actually a lot of coverage. If you are badly injured in an accident where the other person is found liable but has only that minimal third-party liability, you could well have to sue to recover your damages. Pain and suffering, medical expenses, and lost wages could easily add up to far more than $200,000.
The reverse is also true. If you are found liable in a major accident and have only minimal coverage, the injured party could sue you personally to get money.
Here in Newfoundland and Labrador, there are two types of mandatory auto insurance coverage. They are accident benefits and third-party liability. As we’ve said, the law gives the individual driver who did not cause the accident the legal right to sue an at-fault driver for additional costs and damages not covered by their insurance. If you are that driver, you could find yourself in an expensive and difficult position if all you have is a minimum third-party liability in your auto insurance.
Understand, we are NOT trying to sell insurance. We are just trying to give good advice, and protect people from ending up in financial trouble because of a mistake. So, in answer to the original question: Yes, your auto insurance covers personal injury, up to the maximum of the third-party liability you have paid for. If you have the $200,000 minimum and the court orders a half a million-dollar damages award, you will be personally liable for paying the difference. That’s not a position anyone wants to find themselves in. The solution is to pay for insurance that will give you the coverage you need.
Determining who’s at fault in an auto accident
There is one other issue around this question that we think is worth discussing. How is “fault” determined? That determination can have a pretty major effect on the lives of the people involved in an accident.
Here in Newfoundland, adjusters for the insurance companies covering the vehicles involved in an accident will be the ones who decide this. Each company has its own rules and approach to this. The determination will be made by facts, witnesses, and if necessary some very advanced science. Most of the time it’s pretty straightforward, and insurance adjusters have a lot of experience.
The law around auto insurance claims did change slightly in Newfoundland and Labrador recently. In 2020 we move to a direct compensation model. Now, in accidents that involve two or more cars, the “not-at-fault” driver files a claim to their own insurance company. Previously, they had to deal with the other driver’s company.
These changes have been made for two reasons. The first is that it should simplify and improve the experience for drivers. You’ll be dealing with an insurance company you are familiar with. Secondly, it’s expected to reduce costs for insurers and lower premiums for drivers. Both are good things for all of us. But at-fault drivers can and will still be sued in court for pain and suffering. So make sure you have the coverage you need to be properly protected.